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TM, ®, Copyright © 2021 Piero Scaruffi All rights reserved.

TM, ®, Copyright © 2021 Piero Scaruffi All rights reserved.

Articles on Brazil before 2021
Nations in Crisis: Brazil

  • (august 2021) Nations in crisis: Brazil
    Between 1992 and 2014 Brazil didn't experience a recession, even avoiding the worst of the global financial crisis of 2008-9. Per-capita GDP quadrupled in that period of time. In 2007 the Tupi field, one of the world's large oil reserves, were discovered off the coast of Brazil. Thanks to the global financial crisis and the appreciation of its currency, Brazil in 2011 became the sixth largest economy in the world, passing Britain. Brazil's presidents of this golden age were Fernando Cardoso (1994-2002), Luiz Lula (2003-2010) and Dilma Rousseff (2011-2016). Lula and Rousseff presided over the expansion of Brazil's welfare state system that greatly alleviated the nation's poverty. In 2014 the United Nations removed Brazil from the World Hunger Map. In 2015 Brazil's economy entered a recession, mainly due to lower commodity prices, and it has never really recovered because then came the covid pandemic. Throughout the Rousseff presidency Brazil experienced multiple crises: more than 50,000 people were murdered in Brazil in 2012 (they peaked at more than 63,000 in 2017), notably the wave of killings in Sao Paulo of 2012; the Zika pandemic of 2015-16; and the war among the three drug cartels of Brazil (Primeiro Comando da Capital, Comando Vermelho and Familia do Norte) that eventually led to the prison riots of 2017 and 2019.
    The big event of the Rousseff presidency was "Operatio Lava Jato/ Operation Car Wash", a police investigation that resulted in the arrest of dozens of politicians and businessmen, including former president Lula, and in the impeachment of Rousseff herself in August 2016. It began in March 2014 as an investigation into state-owned oil company Petrobras. led by judge Sergio Moro. Moro unveiled endemic corruption within the company, with construction firms paying bribes to Petrobras executives in return for lucrative contracts. In June 2015 the investigation expanded with the arrest of Marcelo Odebrecht, president of Odebrecht: the company was accused of paying bribes to Brazilian politicians and even to foreign politicians. Odebrecht admitted bribing officials in twelve countries and was fined by the USA. It became the largest continental scandal ever, rocking governments from Argentina to Panama and Peru. One of the accused was former president Lula, found guilty of accepting bribes to favor a construction company (Grupo OAS) in lucrative contracts with Petrobras. Moro also accused Lula of money laundering, influence peddling and obstruction of justice, and in 2017 Lula was condemned to several years in prison (Lula was arrested in April 2018 and spent 580 days in prison). Rousseff was not directly involved in taking bribes but popular opinion turned against her because she had chaired the board of directors of Petrobas from 2003 till 2010, when much of the graft was going on. There were mass demonstrations against her in March and April 2015, and eventually she was impeached by parliament (although only for breaking Brazil's budget laws).
    Michel Temer, her vicepresident (from a different party) who took over after her impeachment, enacted an austerity package and dismantled several social programs In 2018 right-wing candidate Jair Bolsonaro (a Donald Trump clone, i.e. a wildly incompetent fascist) won the presidential elections with an anti-corruption and anti-crime platform and was inaugurated president in 2019. It was bad timing because the covid pandemic came to Brazil in 2020 and, just like in the USA, the president's incompetence caused a massacre, second only to the massacre caused by Trump in the USA. Bolsonaro repeated Trump's claims that the virus was a hoax, that malaria pills cure covid, that masks should not be mandatory, that lockdowns are counterproductive, and so on. All of this simply made the pandemic much worse than in the other Latin American countries. As of July 2021, 562,000 people have died in Brazil of covid. Temer and Bolsonaro had just dismantled the government programs that helped the poor, such as the PNAE (National School Feeding Programme), the CONAF (National Confederation of Family Agriculture), and the Bolsa Familia (Family Allowance), so Brazil was totally unprepared to deal with the economic crisis caused by covid. The economy, that was already weak, collapsed under Bolsonaro. Brazil is now the 12th largest economy, passed even by South Korea and Russia besides China, Japan, India and the Western powers. GDP per-capita has declined. Poverty is widespread again. 60% Brazilians are now "food insecure". In March 2021 Brazil's chief of the army, air force and navy resigned in protest against Bolsonaro's mishandling of the covid pandemic, and two months later anti-Bolsonaro protests erupted all over Brazil. Bolsonaro has squandered golden opportunities to improve trade with the West (in 2019 Trump designated Brazil a "major non-NATO ally", just like countries like Japan and Australia, and in 2019 the European Union signed a vast trade agreement with Mercosur, the South American trading bloc, that still hasn't been ratified) and is forced to rely more than ever on the country that he originally attacked, following his role model Trump: China. China has been Brazil's largest trading partner since 2009, when the global financial crisis reduced trade with the Western countries, and China's state-owned companies were attracted to the sweeping privatization program launched by Temer (72 auctions in 2018, including for airports, highways, oil fields, water facilities and power plants). By 2017, over half of China's investments in South America went to Brazil. Brazil's economy now heavily depends on China's purchase of agricultural, forestry, and mining products. Brazil's exports to China exceed in value its combined exports to the USA and the EU. In 2020 Brazil became one of the first countries to adopt the Chinese vaccine CoronaVac. In 2021 Bolsonaro, the former Trump clone, allowed the Chinese telecommunications giant Huawei to bid for a 5G network in Brazil (Trump banned Huawei from the 5G network of the USA and pressured allies to do the same).
    So far Brazil has not benefited much from the pivot towards China. The competition from cheap Chinese manufactured goods has caused a rapid deindustrialization of Brazil and the loss of many well-paying white-collar jobs. At the same time, in order to satisfy China's endless appetite for Brazil's agricultural and forestry products, Brazilian farmers and cattle ranchers have been burning forests at a rapid pace. Bolsonaro's environment minister Ricardo Salles resigned after presiding over the deforestation of 11,000 square kms in just two and a half years.
    Bolsonaro, like Trump, is a skeptic about climate change and hostile to environmental policies. Coincidence or not, in 2021 Brazil faced a new crisis: the worst drought in 91 years. The water crisis is impacting the cost of electricity (because less efficient power plants are being reopened where dams don't have enough water), and the price of food (because it hinders river navigation and makes transportation of goods more expensive).
    Elections are due to be held in 2022 and a new crisis may be looming: just like Trump claimed that the election was stolen by Biden (despite losing by 8 million votes), Bolsonaro is already claiming that the 2022 elections in Brazil will be stolen by the opposition and opposing the electronic voting machines. Just like Trump in 2020, he reads the polls and sees that he is falling further and further behind in the polls. Unlike Trump, who didn't manage to "lock up" his opponent Hillary Clinton, Bolsonaro's main opponent, Lula, was "locked up"; not that prison sentence is now coming back to haunt Bolsonaro himself. After winning the 2018 elections (thanks to the fact that judge Moro had disqualified Lula from running), Bolsonaro appointed Moro as Minister of Justice and Public Security, a fact that already looked a lot like payment for a favor. Then in June 2019 The Intercept, the non-profit online news media founded by billionaire eBay founder Pierre Omidyar, published leaked documents showing that Moro's investigation had not been fair and had been motivated by a political aim: to help Bolsonaro win the 2018 elections. All the accusations against Lula were eventually thrown out by the Supreme Court and Lula is now planning to run for president again. Lula is leading in the polls by a wide margin.
    Just like Trump, Bolsonaro is now making accusations about the voting system, claiming that the 2022 election will be rigged, and promising "proofs" that never happen. Just like Trump, Bolsonaro literally doesn't know what he's talking about. For example, he claimed that some voting machines were victims of a cyber-attack in 2018 (an election which, by the way, he won) but those voting machines are not connected to the Internet.
    The parallels with the USA do not end there. Lula is a leftist like Biden, and, like Biden, is a sort of "granpa figure". If he succeeds Bolsonaro, he will have the same challenges that Biden has: clean up the covid mess, restart the economy, restore trust in government. But, just like Trump in the USA, Bolsonaro is not going away any time soon and will remain a force of destabilization. Bolsonaro, just like Trump, has been and is a major source of disinformation in Brazil.

    Looming over Brazil is another possible crisis: the rising power of the Primeiro Comando da Capital, which now can boast to be as influential as the Mafia was in Sicily. That's another failure of Bolsonaro's regime. He came to power after 2017, the bloodiest year in Brazil's history, promising to reduce crime. While the number of homicides may have declined in 2018 (for a different reason, see below), organized crime is becoming a major economic force, and it's only a matter of time before it becomes a major political force. In 1992 Sao Paulo was shocked by riots in the Carandiru prison (the largest prison in Latin America) during which the police killed 111 convicts. In 1993 convicts in another prison formed the Primeiro Comando da Capital (PCC) to avoid future bloodshed between rival gangs. The PCC was organized along the lines of a trade union: members would pay a fee, and the fee would be used to pay for legal costs. The PCC spread to other parts of the country because the authorities dispatched convicts to other prisons, notably whenever a riot occurred. Basically every time the authorities decided to split members of the gang by sending some away they simply helped the gang evangelize new prisons. Its members remained members after being released from prison, so within a few years more members of the PPC were free imprisoned, and they instituted the same spirit of union and "brotherhood" in the favelas. In 1999 the gang fell under the rule of Marcos "Marcola" Camacho, who had been imprisoned for several bank robberies. Marcola turned PCC into a more traditional mafia-like organization, involved in drug trafficking (and bank robberies), and determined to eliminate the competition of other gangs. In other words, instead of being a prison-centered organization, it became a town-centered organization. In February 2001 Primeiro Comando da Capital staged massive riots in 29 prisons of the state of Sao Paulo, just like a union organizing a strike in an entire province. In 2002 Brazil arrested Chilean terrorist Mauricio Norambuena, who was wanted in Chile since 1996 for the murder of a senator and several kidnappings and bombings. In prison he met Marcola. Thanks to their symbiosis, PCC merged methods of both guerrilla movements and mafia organizations. The PCC planned terrorist attacks that failed until in 2006 they unleashed a series of almost 300 attacks in Sao Paulo within nine days. Sao Paulo was already one of the most violent cities in the world. The PCC has also expanded into Paraguay, Bolivia, Peru, and Colombia. Bolivia is the main supplier of cocaine to Brazil and Paraguay is the main supplier of marijuana. The PCC expanded into Bolivia at least since 1998 when one of Marcola's closest associatesa, Gilberto "Fuminho" dos Santos, escaped from a Brazilian prison and set up a base in Bolivia's coca-producing region of Chapare, and became the leader of the non-incarcerated PCC arm. In 2016 the PCC started recruiting former FARC terrorists after FARC signed a peace deal with the Colombian government (FARC had always collaborated with Brazilian gangs, trading drugs for guns). In 2017 the PCC carried out a massive heist in Paraguay's Ciudad del Este that looked like a Hollywood movie. While the PCC doesn't seem to have penetrated Venezuela yet, it does recruit among the thousands of desperate Venezuelan refugees so it is just a matter of time before the PCC will have a presence in Venezuela. Inside Brazil the PCC still has two big rivals: Comando Vermelho (an older gang born in the 1970s among communist convicts of a Rio prison) and Familia del Norte (formed in 2007 in the Amazon region). The vast majority of gang-related violence is between these three gangs. The PCC is steadily eroding the power of these other gangs after a two-decade truce broke down in 2017, the bloodiest year in Brazil's history. The fact that in 2018 the number of murders declined is due in large part to the PCC having won the war and controlling more territory. The PCC has successfully made Brazil the main port of transit for cocaine from South America to Europe and the USA. In February 2018 Rogerio "Gege do Mangue" de Simone was assassinated and Fuminho became the top PCC leader not in prison. In February 2019 the government finally moved Marcola, now sentenced to more than 200 years of prison, to a maximum-security prison in Brasilia, in April 2020 a joint US-Brazilian operation arrested Fuminho in Mozambique, and in January 2021 Paraguay arrested the leader of the PCC in Paraguay, Giovanni "Bonitao" da Silva. It rests to be seen what will happen to the tens of thousands of members of the PCC and to the money they have accumulated. The organization is far from dead. In January 2020 dozens of PCC members escaped from a prison in Paraguay, and in April 2021 one of the most famous kingpins of the Brazil-Paraguay border, Fuad Georges, surrendered to Brazil because he was afraid of the PCC.

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  • Articles on Brazil before 2021
  • Articles on Brazil before 2021
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